WERLIN: President's trade goals abandoning US global leadership role

Tuesday

During President Trump’s visit to Asia, he continued his efforts to shake up the world economic order and in the process raised fundamental questions about America’s global role.

Trump voiced his belief that America should act in its best interests and he encouraged other countries to act in their best interests. Trump said the incompetence of past American administrations caused our $500 billion trade deficits and massive job losses. In a tweet Trump said, “I do not blame China. I blame the incompetence of past administrations for allowing China to take advantage of the U.S. trade leading up to a point where the U.S. is losing $100's of billions. How can you blame China for taking advantage of people that had no clue? I would have done the same.”

Earlier this year, President Trump pulled the Unites States out of the Trans-Pacific Partnership. On Nov. 11, a group of 11 countries, led by Japan, announced their commitment to a sweeping multinational trade agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This is the largest trade agreement in history. It should increase protections for intellectual property while opening more markets to free trade in agricultural products and digital services.

“This agreement will serve as a foundation for building a broader free-trade area across Asia,” said Tarō Kōno, Japan’s foreign minister.

The agreement is not finalized. “We are pleased that progress is being made towards a possible agreement, but there is still some work to be done,” said Francois-Philippe Champagne, Canada’s minister of international trade.

But these countries are making progress without participation from either the United States or China. China is negotiating a separate deal with 16 Asia-Pacific countries, including Japan, India and South Korea.

By contrast, the Trump administration prefers that the U.S. execute a series of one-on-one trade deals.

Instead of being No. 1, America is withdrawing as the leader of global trade. We are ceding our position as a global leader to China. Other nations are making decisions on whether to join China or join with other countries to counter it.

Rufus Yerxa, president of the National Foreign Trade Council, a lobbying group, said, "At some point, the administration may begin to see that this was a strategic mistake and that dropping out of trade is not in the interest of American workers. We have got to compete and be a winner in global markets — and the danger is the strategy is divisive.”

In 1944, the year I was born, the United States played the leading role in rebuilding the international economic system in an international conference held at the Mount Washington Hotel in Bretton Woods, New Hampshire. The so-called Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent states.

“The U.S. has been the driving force, not just behind the global economic order but also pursuing higher standards on free trade and securing provisions that go way above the World Trade Organization obligations,” said Stephen Olson, a former United States trade negotiator who worked on the North American Free Trade Agreement.

“If the U.S. abdicates that role, it puts us in uncharted territory.”

President Trump wants to limit America’s economic interdependence with the rest of the world, generally referred to as “globalization.” He is critical of the World Trade Organization that was established in 1995 to help settle trade disputes among countries. Trump promotes unilateralism, allowing America to focus on promoting itself without consulting other countries.

While President Trump is correct in pointing out that globalization has hurt the American worker, we have benefited enormously from our leadership role in promoting a global approach to trade. I worry that his efforts will cost us more than they benefit us.

Sarasota resident Ernest "Doc" Werlin spent 35 years in fixed income as a trader and corporate bond salesman, including time as a partner at Morgan Stanley in charge of corporate bond trading. Send suggestions and comments to doc.werlin@gmail.com. Read past columns at docwerlin.com.

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